The Second "Babylonian Captivity"
The Italian government was flabbergasted by the flight of Pope Pius IX. Prime Minister Crispi in particular was outraged, both by the papacy as well as the mob violence in the Vatican. The Italian Army immediately marched into the Vatican, dispersing mobs violently, before taking control of the city themselves. Then, Crispi had a decision to make. A few months later, he saw his chance.
One of Pius IX's first tasks upon settling in Avignon was to officially define papal infallibility. Contrary to the belief of many liberal secularists, the vast majority of cardinals and bishops more or less had already believed in papal infallibility - the disagreement in Avignon was largely a nuanced question of wording. A significant number of bishops voted against the draft constitution outlining papal infallibility not due to any theological disagreement, but simply because they thought the official definition was unnecessary. Indeed, the only major use of papal infallibility was Pius IX's declaration re-confirming the Church's stance on the Immaculate Conception. Regardless, Crispi saw an opportunity, and egged on by the like-minded Prime Minister Gladstone of Britain (who was primarily interested in a permanent religious settlement in Ireland) and the anti-Catholic Chancellor Bismarck of North Germany, he took it.
A very small minority of Catholic bishops had dissented, and upon the proliferation of knowledge that these dissenters would have access to Rome in case of an outright split, their numbers grew. In 1878, a group of dissident Catholic priests led by the Old Catholic Archbishop of Utrecht, Johannes Heykamp, issued the Declaration of Rome, which established the Union of Rome of Old Catholic Churches in the Vatican City, which was declared an independent city-state from the Kingdom of Italy. Crispi loathed the existence of an independent city-state, but he felt this was necessary to help him in his anti-clerical war in Italy proper. This contrasted with Avignon, which was still technically under French sovereignty. Under heavy influence from the governments of Italy, Britain, and Germany, the doctrine of the declaration was relatively limited, primarily (but explicitly) denying the infallibility of the Pope anywhere that would constitute "treason." Of course, papal infallibility had only been used to dogmatize widely-held theological matters, but the Old Catholics insisted that it
could be used to justify treason.
In general, very few bishops joined the Union of Rome. Those that did were almost entirely Dutch, German, or English. Most notably, the Austro-Hungarian Pan-Germanist Georg Ritter von Schonerer became one of the highest profile figures to declare for the Roman Union, much to the condemnation of the Austro-Hungarian government. Much to the disappointment of Gladstone, almost no Irish bishops left with them. Although the Old Catholics largely didn't want to have an actual pope since their objection to papal infallibility was based on their strong preference for the perceived leadership structure of the early Church, Crispi demanded that they have someone at least called a Pope who spoke Italian. As a result, the title of Pope was created, though it was largely given a "first among equals" status. The founders decided in a free vote to select the 36-year old Eduard Herzog, a Swiss German who spoke fluent French and Italian, based on the fact that he spoke the best Italian of anyone in attendance. Breaking with tradition, the Roman Union broke with the Roman Catholic tradition of adopting papal names upon ascending as Pope, thus coronating (Anti-)Pope Edward in Rome.
Governments in Europe immediately took sides with regards to the new schism. Great Britain, Italy, the Netherlands, and North Germany had clearly sided with the Roman Union, immediately recognizing Pope Edward. Most Latin American nations, Austria-Hungary, France, and Portugal vociferously condemned Italy. Notably, Belgium, Russia, and Spain stayed totally neutral, hoping that the split would be settled. The most important geopolitical outcome of the schism was a permanent alienation between Italy's anti-clerical government and France's ultramontane monarchy. In addition, most Catholic priests around the world denounced the "Roman captivity", with most Italian bishops calling on outright resistance to Crispi's anti-clerical government. However, the widespread boycott of Italian Catholics from voting in Italian elections only worked to strengthen Crispi's hold over the Italian government, a government that was increasingly alienating Italians, especially in the South, which in retrospect would be considered one of the key causes of the Italian Revolution.